<PAGE> S-1
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 21, 1994)
$500,000,000
BANPONCE CORPORATION
Medium-Term Notes, Series 1
Due Nine Months or More From Date of Issue
_______________
BanPonce Corporation, a Puerto Rico corporation (the "Corporation"),
may offer from time to time its Medium-Term Notes, Series 1 (the "Notes")
at an aggregate initial offering price not to exceed $500,000,000 or its
equivalent in one or more foreign currencies, including composite
currencies, less an amount equal to the aggregate proceeds from the sale of
certain other securities issued or guaranteed by the Corporation. Each Note
will mature nine months or more from its date of issue, as selected by the
purchaser and agreed to by the Corporation. Unless otherwise indicated in
the applicable Pricing Supplement to this Prospectus Supplement (a "Pricing
Supplement"), and except as set forth in the accompanying Prospectus under
"Description of Debt Securities and Guarantees -- Redemption -- For
Taxation", a Note may not be redeemed at the option of the Corporation or
be repaid at the option of the Holder thereof prior to Maturity (which date
for purposes hereof, shall be the stated maturity date or date of
redemption or repayment, as the case may be) and will be issued in
denominations of $1,000 or integral multiples thereof. If any of the Notes
are to be denominated in a foreign or composite currency, provisions with
respect thereto will be set forth in the applicable Pricing Supplement.
(continued on next page)
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE SECURITIES OFFICE OF THE COMMISSIONER
OF FINANCIAL INSTITUTIONS OF THE COMMONWEALTH OF PUERTO RICO OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION, SUCH SECURITIES OFFICE, OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENT-
ATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Price to Proceeds to
Public(1) Corporation(2)(3)
Per Note . . . . . . . 100% 100%
Total(4) . . . . . . . Up to $500,000,000 Up to $500,000,000
(1) Each Note will be sold at 100% of its principal amount except as may
be provided in the applicable Pricing Supplement.
(2) The Corporation may sell Notes directly to investors on its own
behalf and, if so specified in a supplement hereto, through dealers
or agents designated from time to time, which agents may be
affiliates of the Corporation; or to underwriters for public offering
pursuant to terms of offering fixed at the time of sale. Any such
supplement hereto will also set forth the names of the underwriters,
dealers or agents, the terms of offering, the compensation of such
underwriters, dealers or agents and the net proceeds to the
Corporation.
(3) Before deducting other expenses payable by the Corporation estimated
to be approximately $35,000.
(4) Or the equivalent thereof in foreign currencies or composite
currencies, less an amount equal to the aggregate proceeds from the
sale of certain other securities issued or guaranteed by the
Corporation.
The Notes are being offered on a continuous basis by the Corporation
directly to investors on its own behalf in those jurisdictions where it is
authorized to do so. The Notes will not be listed on any securities
exchange, and there can be no assurance that the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market
for the Notes. The Corporation reserves the right to withdraw, cancel or
modify the offer made hereby without notice. The Corporation may reject any
offer to purchase the Notes in whole or in part. See "Supplemental Plan of
Distribution" in this Prospectus Supplement.
_______________
The date of this Prospectus Supplement is April 13, 1995.
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<PAGE> S-2
(continued from previous page)
The Notes will be unsecured obligations of the Corporation and will
not be savings accounts, deposits or other obligations of any bank or
nonbank subsidiary of the Corporation and are not insured by the Federal
Deposit Insurance Corporation, the Bank Insurance Fund or any other
government agency.
The interest rate, if any, or interest rate formula on each Note and
other variable terms will be established by the Corporation at the date of
issuance of such Note and will be set forth therein and specified in a
Pricing Supplement. Interest rates and interest rate formulae are subject
to change by the Corporation, but no change will affect any Note already
issued or as to which an offer to purchase has been accepted by the
Corporation. Unless otherwise indicated in the applicable Pricing
Supplement, the Notes will bear interest at fixed rates ("Fixed Rate
Notes") or at floating rates ("Floating Rate Notes") determined by
reference to one or more of the Certificate of Deposit Rate, Commercial
Paper Rate, CMT Rate, Eleventh District Cost of Funds Rate, Federal Funds
Rate, LIBOR, Prime Rate, Treasury Rate or other interest rate basis or
formula, as adjusted by any Spread and/or Spread Multiplier applicable to
such Notes. See "Description of Notes" in this Prospectus Supplement and
"Description of Debt Securities and Guarantees" in the accompanying
Prospectus. Interest on Fixed Rate Notes will accrue from their date of
issue and, unless otherwise provided in the applicable Pricing Supplement,
will be payable semi-annually on each June 15 and December 15 and at
Maturity. Interest on Floating Rate Notes will accrue from their date of
issue and will be payable on the dates indicated therein and in the
applicable Pricing Supplement and at Maturity. The Notes may also be issued
at original issue discounts and such Notes may or may not bear interest.
Unless otherwise indicated in the applicable Pricing Supplement, the
Notes will be issued in fully registered certificated or book-entry form.
Ownership of beneficial interests in Notes issued in book-entry form will
be shown on, and transfers thereof will be effected only through, records
maintained by The Depository Trust Company in The City of New York (with
respect to participants' interests), as Depository, and its participants.
Owners of beneficial interests in Notes issued in book-entry form will be
entitled to physical delivery of Notes in certificated form equal in
principal amount to their respective beneficial interests only under the
limited circumstances described herein. See "Description of Notes -- Book-
Entry Notes" in this Prospectus Supplement.
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<PAGE> S-3
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes hereby
supplements, and to the extent inconsistent therewith, replaces the
description of the general terms and provisions of the Notes set forth
under the headings "Description of Debt Securities and Guarantees" in the
accompanying Prospectus dated July 21, 1994, to which general description
reference is hereby made. The particular terms of the Notes offered by any
Pricing Supplement will be described therein and in such Note. However,
unless otherwise provided in the Pricing Supplement applicable to a Note,
each Note will have the following terms.
General
The Notes are to be issued as one or more series of debt securities
(the "Debt Securities"), unlimited as to aggregate principal amount. The
maximum amount of Securities (as defined and described in the accompanying
Prospectus) registered under the registration statement under which the
Debt Securities are registered is $500,000,000, therefore the Notes are
limited in amount to $500,000,000 as set forth on the cover page hereof,
less an amount equal to the aggregate proceeds from the sale of any other
Securities issued from time to time. The Notes are to be issued under the
indenture among the Corporation and The First National Bank of Chicago, as
trustee (the "Trustee"), dated as of February 15, 1995 (the "Indenture"),
which is more fully described in the accompanying Prospectus. As of the
date of this Prospectus Supplement, $159,100,000 aggregate principal amount
of Securities had been issued by a subsidiary of the Corporation and
guaranteed by the Corporation and the Corporation had issued $115,000,000
aggregate principal amount of indebtedness under, and entitled to the
benefits of, the Indenture. The following summaries of certain provisions
of the Indenture do not purport to be complete, are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indenture and the Notes, including the definitions therein of certain
terms. In addition, all capitalized terms used in this Prospectus
Supplement and not otherwise defined herein shall have the respective
meanings ascribed to them in the Indenture. The terms and conditions set
forth below will apply to each Note unless otherwise specified in the
applicable Pricing Supplement or Foreign Currency, Multi-Currency and
Indexed Note Prospectus Supplement (as hereinafter defined).
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities
may be issued in one or more series up to the aggregate principal amount
which may be authorized from time to time by the Corporation. The
Corporation may, from time to time, without the consent of the Holders of
the Notes, provide for the issuance of Notes or other Debt Securities under
the Indenture in addition to the $225,900,000 principal amount of
Securities authorized and available for issuance as of the date of this
Prospectus Supplement. The Notes will be denominated in and payable in
United States dollars except as may otherwise be provided in the applicable
Pricing Supplement.
The Notes will be direct, unsecured debt of the Corporation and will
rank pari passu among themselves and with all other unsecured and
unsubordinated existing and future indebtedness of the Corporation from
time to time outstanding.
The Notes will be offered on a continuous basis and will mature on
any day nine months or more from the date of issue, as selected by the
initial purchaser and agreed to by the Corporation. Unless otherwise
indicated in a Pricing Supplement, each interest bearing Note will bear
interest at (a) a fixed rate ("Fixed Rate Note") or (b) a floating rate
("Floating Rate Note") determined by reference to one or more of the Base
Rates described below as adjusted by a Spread and/or Spread Multiplier (as
defined below), if any, applicable to such Note until the principal thereof
is paid or made available for payment. Notes may be issued at significant
discounts from their principal amount payable at Maturity ("Original Issue
Discount Notes"), and some such Notes may not bear interest.
Unless otherwise indicated in the applicable Pricing Supplement, the
Notes will be issued in fully registered certificated or book-entry form
and, unless otherwise specified in a supplement hereto, in denominations of
$1,000 and integral multiples thereof. Notes issued in certificated form
may be transferred or exchanged as described below. In the event Notes are
issued in book-entry form
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<PAGE> S-4
through the facilities of The Depository Trust Company in The City of New
York (the "Depository"), transfers or exchanges may be similarly effected
through a participating member of the Depository. See "Book-Entry Notes".
No service charge will be made for the registration of transfer or exchange
of Notes issued in certificated form, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith.
Payments on Notes issued in book-entry form will be made to the
Depository or its nominee in accordance with the arrangements then in
effect between the Trustee and the Depository. See "Book-Entry Notes".
Principal and interest on Notes issued in certificated form due at Maturity
on each Note will be payable in immediately available funds upon
presentation of the Note at the office of the Trustee at 14 Wall Street,
Eighth Floor, New York, New York 10005, Attention: Corporate Trust
Services. Interest payable at Maturity will be payable to the person to
whom the principal of the Note shall be paid. Interest due other than at
Maturity will be payable by check mailed to the record holder of such Note
as of the Regular Record Date with respect to such Interest Payment Date at
the address shown in the register maintained by the Trustee. Transfers of
the Notes will be registrable at the above-stated office of the Trustee.
Interest payments shall be the amount of interest accrued from and
including the next preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no
interest has been paid with respect to such Note), to, but excluding, the
succeeding Interest Payment Date or at Maturity, as the case may be (each
an "Interest Accrual Period"). The principal and interest payable at
Maturity on each Note will be paid on such date in immediately available
funds against presentation of the Note at the above-referenced office of
the Trustee. Notwithstanding the foregoing, a Holder of $10,000,000 or more
in an aggregate principal amount of Notes issued in certificated form and
having the same Interest Payment Dates may, upon receipt of written
instruction by the Trustee before a Regular Record Date, receive payments
of interest by transfer of immediately available funds to an account at a
bank located in The City of New York (or other bank consented to by the
Corporation) designated in such notice by such Holder (provided that such
bank has appropriate facilities therefor) commencing with the next Interest
Payment Date succeeding such Regular Record Date. Any such designation for
wire transfer purposes shall be made by filing the appropriate information
with the Paying Agent at its Corporate Trust Office in the Borough of
Manhattan, The City of New York, and unless revoked by written notice to
the Paying Agent received on or prior to the Regular Record Date
immediately preceding the applicable Interest Payment Date or the fifteenth
day preceding Maturity, shall remain in effect with respect to any further
payment to such Holder. The Corporation has initially appointed The First
National Bank of Chicago as the Paying Agent and Security Registrar.
Redemption
The Notes will be subject to redemption in the circumstances set
forth in the accompanying Prospectus under "Description of Debt Securities
and Guarantees -- Redemption -- For Taxation". The Notes will also be
subject to redemption by the Corporation on and after the initial
redemption date, if any, fixed at the time of sale and set forth in the
applicable Pricing Supplement and the applicable Note (the "Initial
Redemption Date"). If no Initial Redemption Date is indicated with respect
to a Note, such Note will not be redeemable prior to the Stated Maturity.
On and after the Initial Redemption Date with respect to any Note, such
Note will be redeemable in whole or in part in increments of $1,000 at the
option of the Corporation at a price (the "Redemption Price") determined in
accordance with the following paragraph, together with interest thereon
payable to the date of redemption, on notice given no more than 60 nor less
than 30 days prior to the date of redemption.
The Redemption Price for each Note subject to redemption shall
initially be equal to a certain percentage (the "Initial Redemption
Percentage") of the principal amount of such Note to be redeemed and shall
decline at each anniversary of the Initial Redemption Date with respect to
such Note by a percentage (the "Annual Redemption Percentage Reduction") of
the principal amount to be redeemed until the Redemption Price is 100% of
such principal amount. The Initial Redemption Percentage and any Annual
Redemption Percentage Reduction with respect to each Note subject to
redemption prior to its Stated Maturity will be fixed at the time of sale
and set forth in the applicable Pricing Supplement and the applicable Note.
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<PAGE> S-5
Repayment
The Notes will be subject to repayment at the option of the Holders
thereof in accordance with the terms of the Notes on their respective
optional repayment dates, if any, fixed at the time of sale and set forth
in the applicable Pricing Supplement and the applicable Note (the "Optional
Repayment Dates"). If no Optional Repayment Date is indicated with respect
to a Note, such Note will not be repayable at the option of the Holder
prior to the Stated Maturity. On any Optional Repayment Date with respect
to any Note, such Note will be repayable in whole, or in part in increments
of $1,000 at the option of the Holder thereof, at a price equal to 100% of
the principal amount to be repaid, together with interest thereon payable
to the date of repayment, on notice given not more than 60 nor less than 30
days prior to the Optional Repayment Date. Unless otherwise indicated in
the applicable Pricing Supplement, in order for the exercise of the
repayment option to be effective and the Note to be repaid, the Corporation
must receive at the office of the Paying Agent or at such other place or
places of which the Corporation shall from time to time notify the Holder
of such Note, on or before the thirtieth, but not earlier than the sixtieth
calendar day, or, if such day is not a Business Day (as hereinafter
defined), the next succeeding Business Day, prior to the repayment date,
either (i) the Note, with the form entitled "Option to Elect Repayment"
duly completed, or (ii) a telegram, telex, facsimile transmission, or
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States of America setting forth (a) the name,
address, and telephone number of the Holder of the Note, (b) the principal
amount of the Note and the amount of the Note to be repaid, (c) a statement
that the option to elect repayment is being exercised thereby, and (d) a
guarantee stating that the Paying Agent on behalf of the Corporation will
receive this Note, with the form entitled "Option to Elect Repayment" duly
completed, not later than five Business Days after the date of such
telegram, telex, facsimile transmission, or letter (and the Note and form
duly completed are received by the Paying Agent on behalf of the
Corporation by such fifth Business Day). Any such election shall be
irrevocable.
While the Book-Entry Notes are represented by the Global Securities
held by or on behalf of the Depository, and registered in the name of the
Depository or the Depository's nominee, the option for repayment may be
exercised by the applicable participant that has an account with the
Depository, on behalf of the beneficial owners of the Global Security or
Securities representing such Book-Entry Notes, by delivering a written
notice substantially similar to the above mentioned form to the Trustee at
its Corporate Trust Office (or such other address of which the Corporation
shall from time to time notify the Holders), not more than 60 nor less than
30 days prior to the date of repayment. Notices of elections from
participants on behalf of beneficial owners of the Global Security or
Securities representing such Book-Entry Notes to exercise their option to
have such Book-Entry Notes repaid must be received by the Trustee by
5:00 P.M., New York City time, on the last day for giving such notice. In
order to ensure that a notice is received by the Trustee on a particular
day, the beneficial owner of the Global Security or Securities representing
such Book-Entry Notes must so direct the applicable participant before such
participant's deadline for accepting instructions for that day. Different
firms may have different deadlines for accepting instructions from their
customers. Accordingly, beneficial owners of the Global Security or
Securities representing Book-Entry Notes should consult the participants
through which they own their interest therein for the respective deadlines
for such participants. All notices shall be executed by a duly authorized
officer of such participant (with signature guaranteed) and shall be
irrevocable. In addition, beneficial owners of the Global Security or
Securities representing Book-Entry Notes shall effect delivery at the time
such notice of election is given to the Depository by causing the
applicable participant to transfer such beneficial owner's interest in the
Global Security or Securities representing such Book-Entry Notes, on the
Depository's records, to the Trustee. See "Book-Entry Notes."
The Corporation may at any time purchase Notes at any price or prices
in the open market or otherwise. Notes so purchased by the Corporation may
be held or resold or, at the discretion of the Corporation, may be
surrendered to the Trustee for cancellation.
Fixed Rate Notes
Each Fixed Rate Note will bear interest from the date of issue at the
rate per annum stated on the face thereof until the principal amount
thereof is paid
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<PAGE> S-6
or made available for payment. Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in the applicable Pricing Supplement,
interest on Fixed Rate Notes will be payable semi-annually in arrears on
June 15 and December 15 of each year (each, an "Interest Payment Date") and
at Maturity. The Regular Record Date for Fixed Rate Notes with respect to
any June 15 or December 15 Interest Payment Date will be the June 1 or
December 1, whether or not such date shall be a Business Day, immediately
preceding such Interest Payment Date. If any Interest Payment Date or
Maturity with respect to a Fixed Rate Note falls on a day that is not a
Business Day, the related payment of principal, premium, if any, or
interest shall be made on the next Business Day as if it were made on the
date such payment was due, and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or at
Maturity. If the Original Issue Date of a Note is between a Regular Record
Date and the corresponding Interest Payment Date, the initial interest
payment will be made on the Interest Payment Date following the next
succeeding Regular Record Date to the Holder on such next succeeding
Regular Record Date.
Floating Rate Notes
Interest on Floating Rates Notes will be determined by reference to
one or more "Base Rates" which shall be (a) the "Certificate of Deposit
Rate" ("Certificate of Deposit Rate Notes"), (b) the "Commercial Paper
Rate" ("Commercial Paper Rate Notes"), (c) the "CMT Rate" ("CMT Rate
Notes"), (d) the "Eleventh District Cost of Funds Rate" ("Eleventh District
Cost of funds Rate Notes"), (e) the "Federal Funds Rate" ("Federal Funds
Rate Notes"), (f) "LIBOR" ("LIBOR Notes"), (g) the "Prime Rate", ("Prime
Rate Notes"), (h) the "Treasury Rate" ("Treasury Rate Notes") or (i) such
other interest rate basis or formula as may be set forth in an applicable
Pricing Supplement. The interest rate on each Floating Rate Note will be
calculated by reference to one or more specified Base Rates based upon the
Index Maturity and adjusted by a Spread and/or Spread Multiplier, if any,
as specified in the applicable Pricing Supplement, if applicable, and
subject to the Minimum Interest Rate, if any, and the Maximum Interest
Rate, if any. The "Index Maturity" is the period to maturity of the
instrument or obligation from which the Base Rate is calculated. The
"Spread" is the number of basis points above or below the Base Rate
applicable to the interest rate for such Floating Rate Note, and the
"Spread Multiplier" is the percentage of the Base Rate applicable to the
interest rate for such Floating Rate Note. The Spread, Spread Multiplier,
Index Maturity and other variable terms of the Floating Rate Notes are
subject to change by the Corporation from time to time, but no such change
will affect any Floating Rate Note theretofore issued or as to which an
offer has been accepted by the Corporation.
The applicable Pricing Supplement will specify certain terms for each
Floating Rate Note in connection with which it is being delivered,
including the following: Base Rate, Initial Interest Rate, Interest Rate
Reset Period or Interest Reset Dates, Interest Payment Dates, Index
Maturity, Maturity, Maximum Interest Rate and Minimum Interest Rate, if
any, Spread or Spread Multiplier, if any, Optional Repayment Dates, if any,
Initial Redemption Date, if any, Initial Redemption Percentage, Annual
Redemption Percentage Reduction and Alternate Rate Event Spread, if
applicable.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (each, an "Interest
Rate Reset Period"), as specified in the applicable Pricing Supplement. The
"Interest Reset Date" will be, in the case of Floating Rate Notes which
reset (a) daily, each Business Day; (b) weekly, the Wednesday of each week
(with the exception of weekly reset Treasury Rate Notes, which reset
Tuesday of each week except as provided below; (c) monthly, the third
Wednesday of each month (with the exception of Eleventh District Cost of
Funds Rate Notes, which reset the first Business Day of each month);
(d) quarterly, the third Wednesday of March, June, September and December
of each year; (e) semi-annually, the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (f) annually, the third
Wednesday of the month specified in the applicable Pricing Supplement. If
any Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding day that is a Business Day, except that in the case of
a LIBOR Note or Notes, if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the next preceding
Business Day. Unless otherwise specified in the applicable Pricing
Supplement, "Business Day" means any day, other than a Saturday, Sunday or
other day on which banks in The City
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<PAGE> S-7
of New York are required or authorized by law, regulation or executive
order to close, and with respect to LIBOR Notes, that is also a London
Banking Day. "London Banking Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
A Floating Rate Note may also have either or both of the following:
(i) a maximum limit, or ceiling (the "Maximum Interest Rate"), on the rate
of interest which may accrue during any Interest Period (as defined below);
and (ii) a minimum limit, or floor (the "Minimum Interest Rate"), on the
rate of interest which may accrue during any Interest Period.
Notwithstanding any Maximum Interest Rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on
Floating Rate Notes will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law
of general application. Under present New York law, the maximum rate of
interest is 25% per annum on a simple interest basis. The limit may not
apply to Floating Rate Notes in which $2,500,000 or more has been invested.
The interest rate in effect with respect to a Floating Rate Note
during any Interest Period commencing as of an Interest Reset Date will be
the rate determined as of the "Interest Determination Date." The Interest
Determination Date pertaining to an Interest Reset Date for Certificate of
Deposit Rate Notes, Commercial Paper Rate Notes, CMT Rate Notes, Federal
Funds Rate Notes and Prime Rate Notes will be the second Business Day
preceding such Interest Reset Date. The Interest Determination Date with
respect to an Interest Reset Date for LIBOR Notes will be the second London
Banking Day preceding such Interest Reset Date. With respect to Treasury
Rate Notes, the Interest Determination Date with respect to an Interest
Reset Date will be the day of the week in which the Interest Reset Date
falls on which Treasury bills are auctioned (Treasury bills are normally
sold at auction on Monday of each week, unless that day is legal holiday,
in which case the auction is most frequently held on the following Tuesday,
except that such auction may be held on the preceding Friday); provided,
however, that if as a result of a legal holiday an auction is held on the
Friday of the week preceding an Interest Reset Date, the related Interest
Determination Date shall be such preceding Friday; and, provided, further
that if an auction shall fall on any Interest Reset Date, then the Interest
Reset Date shall instead be the first Business Day following such auction.
The Interest Determination Date with respect to an Interest Reset Date for
Eleventh District Cost of Funds Rate Notes will be the last Business Day of
the month immediately preceding such Interest Reset Date on which the
Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco")
publishes the monthly Eleventh District Cost of Funds Index (as defined
below).
The interest rate determined with respect to any Interest
Determination Date will become effective on and as of the next succeeding
Interest Reset Date, subject to any maximum or minimum interest rate
limitation referred to above; provided, however, that the interest rate in
effect with respect to a Floating Rate Note for the period from the date of
issue to the initial Interest Reset Date will be the "Initial Interest
Rate" specified in the applicable Pricing Supplement.
Each Floating Rate Note will bear interest from the date of issue at
the rates determined as described herein until the principal thereof is
paid or otherwise made available for payment. Except as provided below or
in the applicable Pricing Supplement, interest will be payable, in the case
of Floating Rate Notes which reset (a) daily, weekly or monthly, on the
third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the applicable Pricing
Supplement; (b) quarterly, on the third Wednesday of March, June, September
and December of each year; (c) semi-annually, on the third Wednesday of the
two months of each year specified in the applicable Pricing Supplement; and
(d) annually, on the third Wednesday of the month specified in the
applicable Pricing Supplement (each, an "Interest Payment Date") and, in
each case, at Maturity.
If any Interest Payment Date with respect to any Floating Rate Note
would otherwise fall on a day that is not a Business Day with respect to
such Note, such Interest Payment Date shall be postponed to the next day
that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day falls in the next succeeding calendar month, such Interest
Payment Date shall be advanced to the immediately preceding Business Day.
If the date of maturity of any Floating Rate Note would fall on a day that
is not a Business Day, the payment of principal, premium, if any, and
interest shall be made on the next succeeding
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<PAGE> S-8
Business Day, and no interest on such payment shall accrue for the period
from and after Maturity.
The "Regular Record Date" for Floating Rate Notes with respect to any
Interest Payment Date shall be the fifteenth calendar day, whether or not
such date shall be a Business Day, prior to such Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement, with
respect to a Floating Rate Note, accrued interest will be calculated by
multiplying the face amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor is computed by adding the
interest factor calculated for each day in the period for which accrued
interest is being calculated. Unless otherwise specified in the applicable
Pricing Supplement, the interest factor for each such day is computed by
dividing the interest rate applicable to such day by 360 (or, in the case
of Treasury Rate Notes or CMT Rate Notes, by the actual number of days in
the year).
Unless otherwise provided for in the applicable Pricing Supplement,
The First National Bank of Chicago will be the "Calculation Agent" for the
Floating Rate Notes. Upon the request of the Holder of any Floating Rate
Note, the Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate that will become effective as a
result of a determination made for the next Interest Reset Date with
respect to such Floating Rate Note. The Calculation Agent will calculate
the Interest Rate on or before any applicable Calculation Date. Unless
otherwise specified in the applicable Pricing Supplement, the "Calculation
Date", where applicable, pertaining to any Interest Determination Date will
be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.
All percentages resulting from any calculation on floating Rate Notes
will be rounded, if necessary to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) will be rounded upward to 9.87655%
(or .0987655)), and all dollar amounts used in or resulting from such
calculation on Floating Rate Notes will be rounded to the nearest cent
(with one-half cent being rounded upward).
As mentioned above, the Initial Interest Rate will be specified in
the applicable Pricing Supplement. The interest rate that will become
effective on each subsequent Interest Reset Date will be determined by the
Calculation Agent as set forth below plus or minus any Spread and/or
multiplied by any Spread Multiplier and subject to the Minimum Interest
Rate, if any, and the Maximum Interest Rate, if any, as specified in the
applicable Pricing Supplement.
Certificate of Deposit Rate: Unless otherwise indicated in the
applicable Pricing supplement, "Certificate of Deposit Rate" means, with
respect to any Interest Determination Date relating to a Certificate of
Deposit Rate Note (a "Certificate of Deposit Rate Interest Determination
Date"), the rate on that day for negotiable certificates of deposit having
the Index Maturity specified in the applicable Pricing Supplement as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates", or any successor
publication ("H.15(519)"), under the heading "CDs (Secondary Market)," or,
if not so published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Certificate of Deposit Rate Interest Determination
Date, then the Certificate of Deposit Rate shall be the rate on such
Certificate of Deposit Rate Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified in the applicable
Pricing Supplement as published by the Federal Reserve Bank of New York in
its daily statistical release "Composite 3:30 P.M. quotations for U.S.
Government Securities" or any successor publication of the Federal Reserve
Bank of New York ("Composite Quotations") under the heading "Certificates
of Deposit". If such rate is not published by 3:00 P.M., New York City
time, on such Calculation Date, in either H.15(519) or Composite
Quotations, then the Certificate of Deposit Rate for such Certificate of
Deposit Rate Interest Determination Date shall be the arithmetic mean
calculated by the Calculation Agent of the secondary market offered rates
as of 10:00 A.M., New York city time, on such Certificate of Deposit Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York (which may
include the Agents) selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks (in the
market for
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<PAGE> S-9
negotiable certificates of deposit) with a remaining maturity closest to
the Index Maturity specified in the applicable Pricing Supplement in
denominations of $5,000,000; provided, however, that if fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting rates as
mentioned in this sentence, then the Certificate of Deposit Rate with
respect to such Certificate of Deposit Rate Interest Determination Date
shall be the Certificate of Deposit Rate in effect on such Certificate of
Deposit Rate Interest Determination Date.
Commercial Paper Rate: Unless otherwise indicated in the applicable
Pricing Supplement, "Commercial Paper Rate" means, with respect to any
Interest Determination Date relating to a Commercial Paper Rate Note (a
"Commercial Paper Rate Interest Determination Date"), the Money Market
Yield (as defined below) on such date of the rate for commercial paper
having the Index Maturity specified in the applicable Pricing Supplement as
published in H.15(519) under the heading "Commercial Paper". In the event
that such rate is not so published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Rate Interest
Determination Date, then the Commercial Paper Rate shall be the Money
Market Yield on such Commercial Paper Rate Interest Determination Date of
the rate for commercial paper of the specified Index Maturity as published
in Composite Quotations under the heading "Commercial Paper". If the rate
for a Commercial Paper Rate Interest Determination Date is not published in
either H.15(519) or Composite Quotations by 3:00 P.M., New York City time,
on the Calculation Date, the Commercial Paper Rate for that commercial
Paper Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 A.M., New York city time, on such
Commercial Paper Rate Interest Determination Date, of three leading dealers
in commercial paper in The City of New York (which may include the Agents)
selected by the Calculation Agent for commercial paper of the specified
Index Maturity placed for an industrial issuer whose bond rating is "AA",
or the equivalent, from a nationally recognized rating agency; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting rates as mentioned in this sentence, the
Commercial Paper Rate with respect to such Commercial Paper Rate Interest
Determination Date shall be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" shall be the yield (expressed as a percentage
rounded as aforesaid) calculated in accordance with the following formula:
Money Market Yield = D x 360
------------- x 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper quoted on a
bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the period for which interest is being calculated.
CMT Rate Notes. Unless otherwise specified in the applicable Pricing
Supplement, "CMT Rate" means, with respect to any Interest Determination
Date relating to a CMT Rate Note (a "CMT Rate Interest Determination
Date"), the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption " . . . Treasury Constant Maturities . . . Federal
Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M." under the
column for the Designated CMT Maturity Index (as defined below) for (i) if
the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding
the week in which the related CMT Rate Interest Determination Date occurs.
If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate for such CMT Rate Interest Determination Date will
be such treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519). If such rate is no longer
published, or if not published by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date
with respect to such Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519). If such information is not
provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for the CMT Rate Interest Determination Date
<PAGE>
<PAGE> S-10
will be calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 P.M., New York City time, on the
CMT Rate Interest Determination Date reported, according to their written
records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York (which may
include an Agent or its affiliates) selected by the Calculation Agent (from
five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining
term to maturity of not less than such Designated CMT Maturity Index minus
one year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such CMT Rate Interest Determination Date will
be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offer side prices as
of approximately 3:30 P.M., New York City time, on the CMT Rate Interest
Determination Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of
years that is the next highest to the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity Index and
in an amount of at least $100 million. If three or four (and not five) of
such Reference Dealers are quoting as described above, then the CMT Rate
will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes will be eliminated;
provided however, that if fewer than three Reference Dealers selected by
the Calculation Agent are quoting as described herein, the CMT Rate will be
the CMT Rate in effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the third
preceding sentences have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page designated in the applicable Pricing
Supplement (or any other page as may replace such page on that service for
the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)). If no such page is specified in the applicable Pricing
Supplement, the Designated CMT Telerate Page shall be 7052, for the most
recent week.
"Designated CMT Maturity Index" means the original period to maturity
of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the
applicable Pricing Supplement, the Designated CMT Maturity Index shall be 2
years.
Eleventh District Cost of Funds Rate. Unless otherwise specified in
the applicable Pricing Supplement, "Eleventh District Cost of Funds Rate"
means, with respect to any Interest Determination Date relating to an
Eleventh District Cost of Funds Rate Note (an "Eleventh District Cost of
Funds Rate Interest Determination Date"), the rate equal to the monthly
weighted average cost of funds for the calendar month immediately preceding
the month in which such Eleventh District Cost of Funds Rate Interest
Determination Date falls, as set forth under the caption "11th District" on
Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such Eleventh
District Cost of Funds Rate Interest Determination Date. If such rate does
not appear on Telerate Page 7058 on any related Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds
Rate for such Eleventh District Cost of Funds Rate Interest Determination
Date shall be the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District that was most
recently announced (the "Index") by the FHLB of San Francisco as such cost
of funds for the calendar month immediately preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for
the calendar month immediately preceding such Eleventh District Cost of
Funds Rate Interest Determination Date, then the Eleventh District Cost of
Funds Rate determined as of such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds in
effect on such Eleventh District Cost of Funds Rate Interest Determination
Date.
<PAGE>
<PAGE> S-11
In determining that the FHLB of San Francisco has failed in any month
to publish the Eleventh District Cost of Funds Index, the Calculation Agent
may rely conclusively on any written advice from the FHLB of San Francisco
to such effect.
Federal Funds Rate: Unless otherwise indicated in the applicable
Pricing Supplement, "Federal Funds Rate" means, with respect to any
Interest Determination Date relating to a Federal Funds Rate Note (a
"Federal Funds Rate Interest Determination Date"), the rate on that day for
Federal Funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not so published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Federal Funds Rate Interest
Determination Date, the Federal Funds Rate shall be the rate on such
Federal Funds Rate Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If such rate
is not published by 3:00 P.M., New York City time, on such Calculation Date
in either source, the Federal Funds Rate shall be the arithmetic mean
calculated by the Calculation Agent of the rates for the last transaction
in overnight Federal Funds arranged by three leading brokers of Federal
Funds transactions in The City of New York selected by the Calculation
Agent as of 9:00 A.M., New York City time, on such Federal Funds Interest
Determination Date; provided, however, that if fewer than three brokers
selected as aforesaid by the Calculation Agent are quoting rates as
described above, the Federal Funds Rate with respect to such Federal Funds
Rates Interest Determination Date shall be the Federal Funds Rate in effect
on such Federal Funds Interest Determination Date.
LIBOR: Unless otherwise indicated in the applicable Pricing
Supplement, LIBOR will be determined by the Calculation Agent in accordance
with the following provisions:
(i) With respect to an Interest Determination Date relating to
a LIBOR Note (a "LIBOR Interest Determination Date"), LIBOR will be,
as specified in the applicable Pricing Supplement, either (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars
having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Banking Day immediately
following such LIBOR Interest Determination Date, that appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date, if at least two such offered rates
appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the
rate for deposits in U.S. dollars having the Index Maturity
designated in the applicable Pricing Supplement, commencing on the
second London Banking Day immediately following such LIBOR Interest
Determination Date, that appears on Telerate Page 3750 as of 11:00
A.M., London time, on such LIBOR Interest Determination Date ("LIBOR
Telerate"). "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rates Service (or such
other page as may replace page LIBO on that service for the purpose
of displaying London interbank offered rates of major banks).
"Telerate Page 3750" means the display designated as page "3750" on
the Telerate Service (or such other page as may replace the 3750 page
on that service or such other service or services as may be nominated
by the British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. dollar deposits). If neither
LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR will be determined as if LIBOR Telerate had
been specified. If LIBOR Reuters is specified in the applicable
Pricing Supplement and at least two such offered rates appear on the
Reuters Screen LIBO Page, the rate in respect of such LIBOR Interest
Determination Date will be the arithmetic mean of such offered rates
as determined by the Calculation Agent. If fewer than two offered
rates appear on the Reuters Screen LIBO Page, or if no rate appears
on Telerate Page 3750, as applicable, LIBOR in respect of such LIBOR
Interest Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear on the Reuters Screen LIBO
Page, as specified in (i)(a) above, or on which no rate appears on
Telerate Page 3750, as specified in (i)(b) above, as applicable,
LIBOR will be determined on the basis of the rates at which deposits
in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement are offered at approximately
11:00 A.M., London time, on such LIBOR Interest Determination Date by
four major banks in the London interbank market selected by the
Calculation Agent (the "Reference Banks") to prime banks in the
London interbank market, commencing on the second London
<PAGE>
<PAGE> S-12
Banking Day immediately following such LIBOR Interest Determination
Date and in a principal amount equal to an amount of not less than
U.S. $1 million that is representative for a single transaction in
such market at such time. The Calculation Agent will request the
principal London office of each of the Reference Banks to provide a
quotation of its rates. If at least two such quotations are provided,
LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR for such LIBOR Interest Determination Date will be
the arithmetic mean of the rates quoted by 11:00 A.M., New York City
time, on such LIBOR Interest Determination Date by three major banks
in The City of New York selected by the Calculation Agent for loans
in U.S. dollars to leading European banks, having the Index Maturity
specified in the applicable Pricing Supplement, commencing on the
second London Banking Day immediately following such LIBOR Interest
Determination Date and in a principal amount equal to an amount of
not less than U.S. $1 million that is representative for a single
transaction in such market at such time; provided, however, that if
the banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, LIBOR will be LIBOR in effect
on such LIBOR Interest Determination Date.
Prime Rate: Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Interest Determination
Date relating to a Prime Rate Note (a "Prime Rate Interest Determination
Date"), the rate set forth in H.15(519) for such date opposite the caption
"Bank Prime Loan". If such rate is not yet published by 9:00 A.M., New York
City time, on the Calculation Date, the Prime Rate for such Prime Rate
Interest Determination Date will be the arithmetic mean of the rates of
interest publicly announced by each bank named on the Reuters Screen NYMF
Page as such bank's prime rate or base lending rate as in effect for such
Prime Rate Interest Determination Date as quoted on the Reuters Screen NYMF
Page on such Prime Rate Interest Determination Date, or, if fewer than four
such rates appear on the Reuters Screen NYMF Page for such Prime Rate
Interest Determination Date, the rate shall be the arithmetic mean of the
prime rates quoted on the basis of the actual number of days in the year
divided by 360 as of the close of business on such Prime Rate Interest
Determination Date by at least two of the three major money center banks in
The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the
Prime Rate shall be calculated by the Calculation Agent and shall be
determined as the arithmetic mean of the prime rates quoted in The City of
New York on such date by the approximate number of banks or trust companies
organized and doing business under the laws of the United States, or any
State thereof, each having total equity capital of at least $500 million
and being subject to supervision or examination by a Federal or State
authority, selected by the Calculation Agent to quote such rate or rates;
provided, however, that if the Prime Rate is not published in H.15(519) and
the banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate with respect to such Prime Rate
Interest Determination Date will be the interest rate otherwise in effect
on such Prime Rate Interest Determination Date. "Reuters Screen NYMF Page"
means the display designated as page "NYMF" on the Reuters Monitor Money
Rates Service (or such other page as may replace page NYMF on that service
for the purpose of displaying prime rates or base lending rates of major
United States banks).
Treasury Rate: Unless otherwise indicated in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest
Determination Date relating to a Treasury Rate Note (a "Treasury Rate
Interest Determination Date"), the rate applicable to the most recent
auction of direct obligations of the United States ("Treasury bills")
having the Index Maturity specified in the applicable Pricing Supplement as
such rate is published in H.15(519) under the heading "Treasury bills
- -- auction average (investment)" or, if not so published by 3:00 P.M., New
York City time, on or prior to the Calculation Date pertaining to such
Treasury Rate Interest Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) for such auction as otherwise
announced by the United States Department of the Treasury. In the event
that the results of the auction of Treasury bills having the specified
Index Maturity are not published or reported as provided above by
3:00 P.M., New York City time, on such Calculation Date, or if no such
auction is held for a particular week, then the Treasury Rate shall be a
yield to maturity (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Treasury Rate Interest Determination
Date,
<PAGE>
<PAGE> S-13
of three leading primary United States government securities dealers as
selected by the Calculation Agent, for the issue of Treasury bills with a
remaining maturity closest to the applicable Index Maturity; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting rates as mentioned in this sentence, the
Treasury Rate with respect to such Treasury Rate Interest Determination
Date shall be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
Original Issue Discount Notes
The Notes may be issued as Original Issue Discount Notes. An
"Original Issue Discount Note" is a Note (bearing no interest or interest
at a rate which at the time of issuance is below market rates) which is
issued at a price lower than the stated principal amount thereof and which
provides that upon redemption prior to Stated Maturity or upon acceleration
of the Maturity thereof an amount less than the principal amount thereof
shall become due and payable. In the event of redemption prior to Stated
Maturity or upon acceleration of the Maturity of an Original Issue Discount
Note, the amount payable to the Holder of such Note upon such redemption or
acceleration will be determined in accordance with the terms of such Note,
but will be an amount less than the amount payable at the Stated Maturity
of such Note. In addition, a Note issued at a discount may, for United
States federal income tax purposes, be considered "Discount Note",
regardless of the amount payable upon redemption or acceleration of
maturity of such Note. See "United States Taxation -- Original Issue
Discount" below. Any other special considerations applicable to any such
discounted Notes will be described in the Pricing Supplement relating
thereto.
Book-Entry Notes
The Notes may be issued in whole or in part in the form of one or
more fully-registered global Notes (each, a "Book-Entry Note") which will
be deposited with, or on behalf of, the Depository and registered in the
name of the Depository's nominee. Except as set forth below, a Book-Entry
Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository or any
nominee to a successor of the Depository or a nominee of such successor.
The Depository has advised the Corporation and will advise any agents
that it is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended. The Corporation
understands that the Depository was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. The Depository's
participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depository. Access to the
Depository's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by
the Depository only through participants.
Upon the issuance of Notes by the Corporation represented by a Book-
Entry Note, the Depository will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Notes represented
by such Book-Entry Note to the accounts of participants. The accounts to be
credited shall be designated by any agents or by the Corporation, if such
Notes are offered and sold directly by the Corporation. Ownership of
beneficial interests in a Book-Entry Note will be limited to participants
or persons that may hold interests through participants. Ownership
interests in a Book-Entry Note will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the
Depository (with respect to beneficial interests of participants), or by
participants or persons that may hold interests through participants (with
respect to beneficial interests of other beneficial owners). The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws
may impair the ability to transfer beneficial interests in a Book-Entry
Note.
<PAGE>
<PAGE> S-14
So long as the Depository for a Book-Entry Note, or its nominee, is
the Holder of a Book-Entry Note, the Depository or its nominee, as the case
may be, will be considered the sole owner or Holder of the Notes
represented by such Book-Entry Note for all purposes under the Indenture.
Except as provided below, owners of beneficial interests in a Book-Entry
Note will not be entitled to have Notes represented by such Book-Entry Note
registered in their names, will not receive or be entitled to receive
physical delivery of Notes in certificated form, and will not be considered
the owners or holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Notes issued in
book-entry form and represented by one or more Book-Entry Notes will be
made by the Corporation to the Depository or its nominee, as the case may
be, as the Holder of the related Book-Entry Note or Notes. None of the
Corporation, the agents, if any, nor the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Book-Entry
Note, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. The Corporation expects that the
Depository, upon receipt of any payment of principal, premium, if any, or
interest in respect of a Book-Entry Note, will credit immediately the
accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of beneficial interest in
such Book-Entry Note as shown on the records of the Depository. The
Corporation also expects that payments by participants to owners of
beneficial interests in a Book-Entry Note will be governed by standing
customer instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered
in "street name" and will be the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
depository or ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and a successor depository is
not appointed by the Corporation within 90 days after the Corporation
receives notice or becomes aware that the Depository is no longer so
registered or, if an Event of Default or an event which, with the lapse of
time, the giving of notice or both, would be an Event of Default, has
occurred and is continuing, the Corporation will issue Notes in
certificated form in exchange for each Book-Entry Note. In addition, the
Corporation may at any time determine not to have Notes represented by one
or more Book-Entry Notes, and, in such event, will issue Notes in
certificated form in exchange for all the Book-Entry Notes representing
such Notes. In any such instance, an owner of a beneficial interest in
Book-Entry Notes will be entitled to physical delivery in certificated form
of Notes equal in principal amount to such beneficial interest and to have
such Notes registered in its name. Notes so issued in certificated form
will be issued in denominations of $1,000 and integral multiples thereof
and will be issued in registered form only, without coupons.
Foreign Currency Notes, Multi-Currency Notes and Indexed Notes
If any Note is not to be denominated in U.S. dollars, certain
provisions with respect thereto will be set forth in a foreign currency or
indexed currency supplement included in the applicable Pricing Supplement
(a "Foreign Currency, Multi-Currency and Indexed Note Pricing Supplement")
which will specify the currency or currencies, including composite
currencies such as the European Currency Unit, in which the principal,
premium, if any, and interest with respect to such Note are to be paid (the
"Specified Currency"), along with any other terms relating to the non-U.S.
dollar denomination. Such additional information contained in the
applicable Foreign Currency, Multi-Currency and Indexed Note Pricing
Supplement shall constitute a part of this Prospectus Supplement.
The Notes also may be issued with the principal amount payable at
Maturity to be determined with reference to the exchange rate of a
Specified Currency relative to an indexed currency (the "Indexed Currency")
or other index, each as set forth in the applicable Foreign Currency,
Multi-Currency and Indexed Note Pricing Supplement. Holders of such Notes
may receive a principal amount at Maturity that is greater than or less
than the face amount of the Note depending upon the relative value at
Maturity of the Specified Currency compared to the Indexed Currency or as
otherwise set forth in the applicable Foreign Currency, Multi-Currency or
Indexed Note Pricing Supplement. Information as to the method for
determining the principal amount payable at Maturity and certain additional
risks and tax considerations associated with investment in such Notes will
be set
<PAGE>
<PAGE> S-15
forth in the applicable Foreign Currency, Multi-Currency and Indexed Note
Pricing Supplement.
UNITED STATES TAXATION
The following summary of the principal United States federal income
tax consequences of ownership of Notes is based upon the opinion of
Sullivan & Cromwell, counsel to the Corporation. It deals only with Notes
held as capital assets by initial purchasers, and not with special classes
of holders, such as dealers in securities or currencies, banks, tax-exempt
organizations, life insurance companies, persons that hold Notes that are a
hedge or that are hedged against currency risks or that are part of a
straddle or conversion transaction, persons that are not "United States
Holders", as defined below, or persons whose functional currency is not the
U.S. dollar. Moreover, the summary deals only with Notes that are due to
mature 30 years or less from the date on which they are issued. The United
States federal income tax consequences of ownership of Notes that are due
to mature more than 30 years from their date of issue will be discussed in
an applicable Pricing Supplement.
The summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in
effect and all subject to change at any time, perhaps with retroactive
effect.
Prospective purchasers of Notes should consult their own tax advisors
concerning the consequences, in their particular circumstances, under the
Code and the laws of any other taxing jurisdiction, of ownership of Notes.
Payments of Interest
Interest on a Note, whether payable in U.S. dollars or a currency,
composite currency or basket of currencies other than U.S. dollars (a
"Specified Currency"), other than interest on a "Discount Note" that is not
"qualified stated interest" (each as defined below under "Original Issue
Discount -- General"), will be taxable to a United States Holder as
ordinary income at the time it is received or accrued, depending on the
holder's method of accounting for tax purposes. A United States Holder is a
beneficial owner who or that is (i) a citizen or resident of the United
States, (ii) a domestic corporation or (iii) otherwise subject to United
States federal income taxation on a net income basis in respect of the
Note.
Interest paid by the Corporation on the Notes and original issue
discount, if any, accrued with respect to the Notes (as described below
under "Original Issue Discount") constitutes income from sources outside
the United States, but, with certain exceptions, will be "passive" or
"financial services" income, which is treated separately from other types
of income for purposes of computing the foreign tax credit allowable to a
United States Holder. As discussed under "Certain Puerto Rico Tax
Considerations", payments of interest on Notes held by noncorporate United
States citizens will be subject to 20 per cent withholding tax and would be
high withholding tax interest for purposes of computing the foreign tax
credit.
If an interest payment is denominated in, or determined by reference
to, a Specified Currency, the amount of income recognized by a cash basis
United States Holder will be the U.S. dollar value of the interest payment,
based on the exchange rate in effect on the date of receipt, regardless of
whether the payment is in fact converted into U.S. dollars.
An accrual basis United States Holder may determine the amount of
income recognized with respect to an interest payment denominated in, or
determined by reference to, a Specified Currency in accordance with either
of two methods. Under the first method, the amount of income accrued will
be based on the average exchange rate in effect during the interest accrual
period (or, with respect to an accrual period that spans two taxable years,
the part of the period within the taxable year). Upon receipt of the
interest payment (including a payment attributable to accrued but unpaid
interest upon the sale or retirement of a Note) denominated in, or
determined by reference to, a Specified Currency, the United States Holder
will recognize ordinary income or loss measured by the difference between
the average exchange rate used to accrue interest income and the exchange
rate in effect on the date of receipt, regardless of whether the payment is
in fact converted into U.S. dollars.
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Under the second method, the United States Holder may elect to
determine the amount of income accrued on the basis of the exchange rate in
effect on the last day of the accrual period or, in the case of an accrual
period that spans two taxable years, the exchange rate in effect on the
last day of the part of the period within the taxable year. Additionally,
if a payment of interest is actually received within five business days of
the last day of the accrual period or taxable year, an electing accrual
basis United States Holder may instead translate such accrued interest into
U.S. dollars at the exchange rate in effect on the day of actual receipt.
Any such election will apply to all debt instruments held by the United
States Holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the United States Holder, and
will be irrevocable without the consent of the Internal Revenue Service
(the "Service").
Original Issue Discount
General. A Note, other than a Note with a term of one year or less (a
"short-term Note"), will be treated as issued at an original issue discount
(a "Discount Note") if the excess of the Note's "stated redemption price at
maturity" over its issue price is more than a "de minimis amount" (as
defined below). Generally, the issue price of a Note will be the first
price at which a substantial amount of Notes included in the issue of which
the Note is a part is sold to other than bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement
agents, or wholesalers. The stated redemption price at maturity of a Note
is the total of all payments provided by the Note that are not payments of
"qualified stated interest". A qualified stated interest payment is
generally any one of a series of stated interest payments on a Note that
are unconditionally payable at least annually at a single fixed rate (with
certain exceptions for lower rates paid during some periods) applied to the
outstanding principal amount of the Note. Special rules for "Variable Rate
Notes" (as defined below under "Original Issue Discount -- Variable Rate
Notes") are described below under "Original Issue Discount -- Variable Rate
Notes".
In general, if the excess of a Note's stated redemption price at
maturity over its issue price is less than 1/4 of 1 percent of the Note's
stated redemption price at maturity multiplied by the number of complete
years to its maturity (the "de minimis amount"), then such excess, if any,
constitutes "de minimis original issue discount" and the Note is not a
Discount Note. Unless the election described below under "Election to Treat
All Interest as Original Issue Discount" is made, a United States Holder of
a Note with de minimis original issue discount must include such de minimis
original issue discount in income as stated principal payments on the Note
are made. The includible amount with respect to each such payment will
equal the product of the total amount of the Note's de minimis original
issue discount and a fraction, the numerator of which is the amount of the
principal payment made and the denominator of which is the stated principal
amount of the Note.
United States Holders of Discount Notes having a maturity of more
than one year from their date of issue must include original issue discount
("OID") in income calculated on a constant-yield method before the receipt
of cash attributable to such income, and generally will have to include in
income increasingly greater amounts of OID over the life of the Note. The
amount of OID includible in income by a United States Holder of a Discount
Note is the sum of the daily portions of OID with respect to the Discount
Note for each day during the taxable year or portion of the taxable year on
which the United States Holder holds such Discount Note ("accrued OID").
The daily portion is determined by allocating to each day in any "accrual
period" a pro rata portion of the OID allocable to that accrual period.
Accrual periods with respect to a Note may be of any length selected by the
United States Holder and may vary in length over the term of the Note as
long as (i) no accrual period is longer than one year and (ii) each
scheduled payment of interest or principal on the Note occurs on either the
final or first day of an accrual period. The amount of OID allocable to an
accrual period equals the excess of (a) the product of the Discount Note's
adjusted issue price at the beginning of the accrual period and such Note's
yield to maturity (determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of the accrual
period) over (b) the sum of the payments of qualified stated interest on
the Note allocable to the accrual period. The "adjusted issue price" of a
Discount Note at the beginning of any accrual period is the issue price of
the Note increased by (x) the amount of accrued OID for each prior accrual
period and decreased by (y) the amount of any payments previously made on
the Note that were not qualified stated interest
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<PAGE> S-17
payments. For purposes of determining the amount of OID allocable to an
accrual period, if an interval between payments of qualified stated
interest on the Note contains more than one accrual period, the amount of
qualified stated interest payable at the end of the interval (including any
qualified stated interest that is payable on the first day of the accrual
period immediately following the interval) is allocated pro rata on the
basis of relative lengths to each accrual period in the interval, and the
adjusted issue price at the beginning of each accrual period in the
interval must be increased by the amount of any qualified stated interest
that has accrued prior to the first day of the accrual period but that is
not payable until the end of the interval. The amount of OID allocable to
an initial short accrual period may be computed using any reasonable method
if all other accrual periods other than a final short accrual period are of
equal length. The amount of OID allocable to the final accrual period is
the difference between (x) the amount payable at the maturity of the Note
(other than any payment of qualified stated interest) and (y) the Note's
adjusted issue price as of the beginning of the final accrual period.
Acquisition Premium. A United States Holder that purchases a Note for
an amount less than or equal to the sum of all amounts payable on the Note
after the purchase date other than payments of qualified stated interest
but in excess of its adjusted issue price (any such excess being
"acquisition premium") and that does not make the election described below
under "Election to Treat All Interest as Original Issue Discount" is
permitted to reduce the daily portions of OID by a fraction, the numerator
of which is the excess of the United States Holder's adjusted basis in the
Note immediately after its purchase over the adjusted issue price of the
Note, and the denominator of which is the excess of the sum of all amounts
payable on the Note after the purchase date, other than payments of
qualified stated interest, over the Note's adjusted issue price.
Market Discount. A Note, other than a short-term Note, will be
treated as purchased at a market discount (a "Market Discount Note") if
(i) the amount for which a United States Holder purchased the Note is less
than the Note's issue price (as determined above under "Original Issue
Discount -- General") and (ii) the Note's stated redemption price at
maturity or, in the case of a Discount Note, the Note's "revised issue
price", exceeds the amount for which the United States Holder purchased the
Note by at least 1/4 of 1 percent of such Note's stated redemption price at
maturity or revised issue price, respectively, multiplied by the number of
complete years to the Note's maturity. If such excess is not sufficient to
cause the Note to be a Market Discount Note, then such excess constitutes
"de minimis market discount". The Code provides that, for these purposes,
the "revised issue price" of a Note generally equals its issue price,
increased by the amount of any OID that has accrued on the Note.
Any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such
gain does not exceed the accrued market discount on such Note.
Alternatively, a United States Holder of a Market Discount Note may elect
to include market discount in income currently over the life of the Note.
Such an election shall apply to all debt instruments with market discount
acquired by the electing United States Holder on or after the first day of
the first taxable year to which the election applies. This election may not
be revoked without the consent of the Service.
Market discount on a Market Discount Note will accrue on a straight-
line basis unless the United States Holder elects to accrue such market
discount on a constant-yield method. Such an election shall apply only to
the Note with respect to which it is made and may not be revoked. A United
States Holder of a Market Discount Note that does not elect to include
market discount in income currently generally will be required to defer
deductions for interest in borrowings allocable to such Note in an amount
not exceeding the accrued market discount on such Note until the maturity
or disposition of such Note.
Pre-Issuance Accrued Interest. If (i) a portion of the initial
purchase price of a Note is attributable to pre-issuance accrued interest,
(ii) the first stated interest payment on the Note is to be made within one
year of the Note's issue date and (iii) the payment will equal or exceed
the amount of pre-issuance accrued interest, then the United States Holder
may elect to decrease the issue price of the Note by the amount of pre-
issuance accrued interest. In that event, a portion of the first stated
interest payment will be treated as a return on the excluded pre-issuance
accrued interest and not as an amount payable on the Note.
Notes Subject to Contingencies Including Optional Redemption. In
general, if a Note provides for an alternative payment schedule or
schedules applicable
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<PAGE> S-18
upon the occurrence of a contingency or contingencies and the timing and
amounts of the payments that comprise each payment schedule are known as of
the issue date, the yield and maturity of the Note are determined by
assuming that the payments will be made according to the Note's stated
payment schedule. If, however, based on all the facts and circumstances as
of the issue date, it is more likely than not that the Note's stated
payment schedule will not occur, then, in general, the yield and maturity
of the Note are computed based on the payment schedule most likely to
occur.
Notwithstanding the general rules for determining yield and maturity
in the case of Notes subject to contingencies, if the Corporation has an
unconditional option or options to redeem a Note, or the Holder has an
unconditional option or options to cause a Note to be repurchased, prior to
the Note's stated maturity, then (i) in the case of an option or options of
the Corporation, the Corporation will be deemed to exercise or not exercise
an option or combination of options in the manner that minimizes the yield
on the Note and (ii) in the case of an option or options of the Holder, the
Holder will be deemed to exercise or not exercise an option or combination
of options in the manner that maximizes the yield on the Note. For purposes
of those calculations, the yield on the Note is determined by using any
date on which the Note may be redeemed or repurchased as the maturity date
and the amount payable on such date in accordance with the terms of the
Note as the principal amount payable at maturity.
If a contingency (including the exercise of an option) actually
occurs or does not occur contrary to an assumption made according to the
above rules (a "change in circumstances") then, except to the extent that a
portion of the Note is repaid as a result of a change in circumstances and
solely for purposes of the accrual of OID, the yield and maturity of the
Note are redetermined by treating the Note as reissued on the date of the
change in circumstances for an amount equal to the Note's adjusted issue
price on that date.
Election to Treat All Interest as Original Issue Discount. A United
States Holder may elect to include in gross income all interest that
accrues on a Note using the constant-yield method described above under the
heading "Original Issue Discount -- General", with the modifications
described below. For purposes of this election, interest includes stated
interest, OID, de minimis original issue discount, market discount, de
minimis market discount and unstated interest, as adjusted by any
amortizable bond premium (described below under "Notes Purchased at a
Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to which
this election has been made, the issue price of the Note will equal the
electing United States Holder's adjusted basis in the Note immediately
after its acquisition, the issue date of the Note will be the date of its
acquisition by the electing United States Holder, and no payments on the
Note will be treated as payments of qualified stated interest. This
election will generally apply only to the Note with respect to which it is
made and may not be revoked without the consent of the Service. If this
election is made with respect to a Note with amortizable bond premium, then
the electing United States Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all debt
instruments with amortizable bond premium (other than debt instruments the
interest on which is excludible from gross income) held by the electing
United States Holder as of the beginning of the taxable year in which the
Notes with respect to which the election is made is acquired or thereafter
acquired. The deemed election with respect to amortizable bond premium may
not be revoked without the consent of the Service.
If the election to apply the constant-yield method to all interest on
a Note is made with respect to a Market Discount Note, the electing United
States Holder will be treated as having made the election discussed above
under "Original Issue Discount -- Market Discount" to include market
discount in income currently over the life of all debt instruments held or
thereafter acquired by such United States Holder.
Variable Rate Notes. A "Variable Rate Note" is a Note that: (i) has
an issue price that does not exceed the total noncontingent principal
payments by more than the lesser of (1) the product of (x) the total
noncontingent principal payments, (y) the number of complete years to
maturity from the issue date and (z) .015, or (2) 15 percent of the total
noncontingent principal payments, and (ii) provides for stated interest
compounded or paid at least annually at (1) one or more "qualified floating
rates", (2) a single fixed rate and one or more
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<PAGE> S-19
qualified floating rates, (3) a single "objective rate" or (4) a single
fixed rate and a single objective rate that is a "qualified inverse
floating rate".
A qualified floating rate or objective rate in effect at any time
during the term of the instrument must be set at a "current value" of that
rate. A "current value" of a rate is the value of the rate on any day that
is no earlier than 3 months prior to the first day on which that value is
in effect and no later than 1 year following that first day.
A variable rate is a "qualified floating rate" if (i) variations in
the value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Note is denominated or (ii) it is equal to the product of such a rate and
either (a) a fixed multiple that is greater than zero but not more than
1.35, or (b) a fixed multiple greater than zero but not more than 1.35,
increased or decreased by a fixed rate. A rate is not a qualified floating
rate, however, if the rate is subject to certain restrictions (including
caps, floors, governors, or other similar restrictions) unless such
restrictions are fixed throughout the term of the Note or are not
reasonably expected to significantly affect the yield on the Note.
An "objective rate" is a rate, other than a qualified floating rate,
that is determined using a single, fixed formula and that is based on
(i) one or more qualified floating rates, (ii) one or more rates each of
which would be a qualified floating rate for a debt instrument denominated
in a currency other than the currency in which the debt instrument is
denominated, (iii) the yield or changes in the price of one or more
actively traded items of personal property other than stock or debt of the
issuer or a related party, or (iv) a combination of objective rates. A
variable rate is not an objective rate, however, if it is reasonably
expected that the average value of the rate during the first half of the
Note's term will be either significantly less than or significantly greater
than the average value of the rate during the final half of the Note's
term. An objective rate is a "qualified inverse floating rate" if (i) the
rate is equal to a fixed rate minus a qualified floating rate, and (ii) the
variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the cost of newly borrowed funds. Under these
rules, CD Rate Notes, Commercial Paper Rate Notes, Eleventh District Cost
of Funds Rate Notes, Federal Funds Rate Notes, LIBOR Notes, Prime Rate
Notes and Treasury Rate Notes will generally be treated as Variable Rate
Notes.
In general, if a Variable Rate Note provides for stated interest at a
single qualified floating rate or objective rate, all stated interest on
the Note is qualified stated interest and the amount of OID, if any, is
determined by using, in the case of a qualified floating rate or qualified
inverse floating rate, the value as of the issue date of the qualified
floating rate or qualified inverse floating rate, or, in the case of any
other objective rate, a fixed rate that reflects the yield reasonably
expected for the Note.
If a Variable Rate Note does not provide for stated interest at a
single qualified floating rate or objective rate, or at a single fixed rate
(other than at a single fixed rate for an initial period), the amount of
interest and OID accruals on the Note are generally determined by
(i) determining a fixed rate substitute for each variable rate provided
under the Variable Rate Note (generally, the value of each variable rate as
of the issue date or, in the case of an objective rate that is not a
qualified inverse floating rate, a rate that reflects the reasonably
expected yield on the Note), (ii) constructing the equivalent fixed rate
debt instrument (using the fixed rate substitute described above),
(iii) determining the amount of qualified stated interest and OID with
respect to the equivalent fixed rate debt instrument, and (iv) making the
appropriate adjustments for actual variable rates during the applicable
accrual period.
If a Variable Rate Note provides for stated interest either at one or
more qualified floating rates or at a qualified inverse floating rate, and
in addition provides for stated interest at a single fixed rate (other than
at a single fixed rate for an initial period), the amount of interest and
OID accruals are determined as in the immediately preceding paragraph with
the modification that the Variable Rate Note is treated, for purposes of
the first three steps of the determination, as if it provided for a
qualified floating rate (or a qualified inverse floating rate, as the case
may be) rather than the fixed rate. The qualified floating rate (or
qualified inverse floating rate) replacing the fixed rate must be such that
the fair market value of the Variable Rate Note as of the
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<PAGE> S-20
issue date would be approximately the same as the fair market value of an
otherwise identical debt instrument that provides for the qualified
floating rate (or qualified inverse floating rate) rather than the fixed
rate.
Indexed Notes. The applicable Pricing Supplement will contain a
discussion of any special United States federal income tax rules with
respect to Notes that are not subject to the rules governing Variable Rate
Notes payments on which are determined by reference to any index.
Short-Term Notes. In general, an individual or other cash basis
United States Holder of a short-term Note is not required to accrue OID (as
specially defined below for the purposes of this paragraph) for United
States federal income tax purposes unless it elects to do so (but may be
required to include any stated interest in income as the interest is
received). Accrual basis United States Holders and certain other United
States Holders, including banks, regulated investment companies, dealers in
securities, common trust funds, United States Holders who hold Notes as
part of certain identified hedging transactions, certain pass-thru entities
and cash basis United States Holders who so elect, are required to accrue
OID on short-term Notes on either a straight-line basis or under the
constant-yield method (based on daily compounding), at the election of the
United States Holder. In the case of a United States Holder not required
and not electing to include OID in income currently, any gain realized on
the sale or retirement of the short-term Note will be ordinary income to
the extent of the OID accrued on a straight-line basis (unless an election
is made to accrue the OID under the constant-yield method) through the date
of sale or retirement. United States Holders who are not required and do
not elect to accrue OID on short-term Notes will be required to defer
deductions for interest on borrowings allocable to short-term Notes in an
amount not exceeding the deferred income until the deferred income is
realized.
For purposes of determining the amount of OID subject to these rules,
all interest payments on a short-term Note, including stated interest, are
included in the short-term Note's stated redemption price at maturity.
Specified Currency Discount Notes. OID for any accrual period on a
Discount Note that is denominated in, or determined by reference to, a
Specified Currency will be determined in the Specified Currency and then
translated into U.S. dollars in the same manner as stated interest accrued
by an accrual basis United States Holder, as described under "Payments of
Interest". Upon receipt of an amount attributable to OID (whether in
connection with a payment of interest or the sale or retirement of a Note),
a United States Holder may recognize ordinary income or loss.
Notes Purchased at a Premium
A United States Holder that purchases a Note for an amount in excess
of its principal amount may elect to treat such excess as "amortizable bond
premium", in which case the amount required to be included in the United
States Holder's income each year with respect to interest on the Note will
be reduced by the amount of amortizable bond premium allocable (based on
the Note's yield to maturity) to such year. In the case of a Note that is
denominated in, or determined by reference to, a Specified Currency, bond
premium will be computed in units of Specified Currency, and amortizable
bond premium will reduce interest income in units of the Specified
Currency. At the time amortized bond premium offsets interest income,
exchange gain or loss (taxable as ordinary income or loss) is realized
measured by the difference between exchange rates at that time and at the
time of the acquisition of the Notes. Any election to amortize bond premium
shall apply to all bonds (other than bonds the interest on which is
excludible from gross income) held by the United States Holder at the
beginning of the first taxable year to which the election applies or
thereafter acquired by the United States Holder, and is irrevocable without
the consent of the Service. See also "Original Issue Discount -- Election
to Treat All Interest as Original Issue Discount".
Purchase, Sale and Retirement of the Notes
A United States Holder's tax basis in a Note will generally be its
U.S. dollar cost (as defined below), increased by the amount of any OID or
market discount included in the United States Holder's income with respect
to the Note and the amount, if any, of income attributable to de minimis
original issue discount and de minimis market discount included in the
United States Holder's income with respect to the Note, and reduced by
(i) the amount of any payments
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<PAGE> S-21
that are not qualified stated interest payments, and (ii) the amount of any
amortizable bond premium applied to reduce interest on the Note. The U.S.
dollar cost of a Note purchased with a Specified Currency will generally be
the U.S. dollar value of the purchase price on the date of purchase or, in
the case of Notes traded on an established securities market, as defined in
the applicable Treasury Regulations, that are purchased by a cash basis
United States Holder (or an accrual basis United States Holder that so
elects), on the settlement date for the purchase.
A United States Holder will generally recognize gain or loss on the
sale or retirement of a Note equal to the difference between the amount
realized on the sale or retirement and the tax basis of the Note. The
amount realized on a sale or retirement for an amount in Specified Currency
will be the U.S. dollar value of such amount on the date of sale or
retirement or, in the case of Notes traded on an established securities
market, as defined in the applicable Treasury Regulations, sold by a cash
basis United States Holder (or an accrual basis United States Holder that
so elects), on the settlement date for the sale. Except to the extent
described above under "Original Issue Discount -- Short-Term Notes" or
"Original Issue Discount -- Market Discount" or described in the next
succeeding paragraph or attributable to accrued but unpaid interest, gain
or loss recognized on the sale or retirement of a Note will be capital gain
or loss and will be long-term capital gain or loss if the Note was held for
more than one year.
Gain or loss recognized by a United States Holder on the sale or
retirement of a Note that is attributable to changes in exchange rates will
be treated as ordinary income or loss. However, exchange gain or loss is
taken into account only to the extent of total gain or loss realized on the
transaction.
Exchange of Amounts in Other Than U.S. Dollars
Specified Currency received as interest on a Note or on the sale or
retirement of a Note will have a tax basis equal to its U.S. dollar value
at the time such interest is received or at the time of such sale or
retirement. Specified Currency that is purchased will generally have a tax
basis equal to the U.S. dollar value of the Specified Currency on the date
of purchase. Any gain or loss recognized on a sale or other disposition of
a Specified Currency (including its use to purchase Notes or upon exchange
for U.S. dollars) will be ordinary income or loss.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to payments
of principal, any premium and interest on a Note and the proceeds of the
sale of a Note before maturity within the United States to, and to the
accrual of OID on a Discount Note with respect to, non-corporate United
States Holders, and "backup withholding" at a rate of 31% will apply to
such payments and to payments of OID if the United States Holder fails to
provide an accurate taxpayer identification number or to report all
interest and dividends required to be shown on its federal income tax
returns.
CERTAIN PUERTO RICO TAX CONSIDERATIONS
The following discussion is a summary of certain Puerto Rico tax
aspects of the acquisition of the Notes and reflects the opinion of
McConnell Valdes, counsel to the Corporation. The income tax portion of
this discussion is based upon the Puerto Rico Income Tax Act of 1954, as
amended (the "ITA"), as well as the Puerto Rico Internal Revenue Code
(the "PRIRC"). The PRIRC, which was enacted on October 31, 1994, is
substantially a reenactment of the ITA, with various additions and deletions.
The ITA will continue in effect until the PRIRC becomes effective. Most
of the provisions of the PRIRC will be effective for taxable years commencing
after June 30, 1995. As discussed below, the Puerto Rico income tax
treatment of interest paid on the Notes will generally be the same under
the ITA and under the PRIRC; any differences in the tax treatment will be
noted. The discussion of the tax treatment under the ITA will be based also
on provisions of the regulations issued under the ITA (the "ITA Regulations").
At this time, regulations have not been issued under the PRIRC.
The discussion below is also based on the Puerto Rico Municipal
Property Tax Act of 1991, as amended (the "MPTA"), the Municipal License
Tax Act, as amended (the "MLTA") and the regulations thereunder (the "MLTA
Regulations"). The discussion concerning Puerto Rico estate and gift taxes
is based on the
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<PAGE> S-22
Estate and Gift Tax Act, as amended (the "EGTA") and the regulations
thereunder (the "EGTA Regulations") in cases of estates of persons who die
before July 1, 1995 and gifts occurring before such date, and on the PRIRC
in cases of deaths and gifts occurring after June 30, 1995. The discussion
below is also based on judicial and administrative interpretations of the
ITA, the MPTA, the MLTA and the EGTA. Investors should be aware that the
ITA, the ITA Regulations, the MPTA, the MLTA, the MLTA Regulations, the
EGTA, the EGTA Regulations and the PRIRC, as well as any interpretations
thereof, are subject to change, and that any change could be applied
retroactively and affect the discussion below.
This discussion is limited to certain Puerto Rico tax considerations
applicable to the following classes of prospective investors: individuals
who are bona fide residents of Puerto Rico, individuals who are not
residents of Puerto Rico, and the corporations and partnerships (other than
"special partnerships" under Supplement P of the ITA or Supplement K of the
PRIRC and other than "corporations of individuals" under Supplement N of
the PRIRC); it does not discuss the Puerto Rico tax considerations
applicable to other types of investors. This discussion does not purport
to cover all aspects of Puerto Rico taxation that may be relevant to
particular investors in light of their personal investment circumstances or
to certain types of investors subject to special treatment under the ITA or
the PRIRC (for example, banks, life insurance companies or tax exempt
organizations). EACH INVESTOR IS STRONGLY URGED TO CONSULT HIS OWN TAX
ADVISOR AS TO ANY PUERTO RICO TAX CONSIDERATIONS AFFECTING THE PURCHASE,
HOLDING AND DISPOSITION OF THE NOTES.
INCOME TAX
The following discussion regarding the Puerto Rico income taxation of
interest paid on the Notes assumes that such interest constitutes income
from sources within Puerto Rico. Interest paid by a corporation organized
under the laws of Puerto Rico is considered to be from Puerto Rico sources
unless such corporation derives less than 20% of its gross income from
Puerto Rico sources during the three taxable years preceding the year in
which the interest is paid (or such part of such period as the corporation
has been in existence). For every year since its incorporation in 1984,
the Corporation has derived more than 20% of its gross income from Puerto
Rico sources.
Puerto Rico Holders
Interest on the Notes
Interest on a Note will be taxable to a Puerto Rico Holder (as
defined below) as ordinary income at the time it is received or accrued,
depending on the Holder's method of accounting for tax purposes. A "Puerto
Rico Holder" is a beneficial owner who or that is (i) an individual
resident of Puerto Rico, (ii) a Puerto Rico corporation or partnership
(other than "special partnerships" and "corporations of individuals"), or
(iii) a non-Puerto Rico corporation or partnership engaged in trade or
business in Puerto Rico (other than "special partnerships" or "corporations
of individuals").
Sale or Retirement of Notes
A Puerto Rico Holder's tax basis in a Note will generally be its
cost. A Puerto Rico Holder, other than non-Puerto Rico corporations or
partnerships engaged in trade or business in Puerto Rico, will generally
recognize gain or loss on the sale or retirement of a Note equal to the
difference between the amount realized on such sale or retirement and the
tax basis of the Note. In the case of non-Puerto Rico corporations or
partnerships engaged in trade or business in Puerto Rico, any gain realized
on the sale or retirement of a Note will be subject to Puerto Rico tax only
if it constitutes income from sources within Puerto Rico. In general, such
gain will be regarded as income from sources within Puerto Rico if the sale
or retirement of the Note occurs in Puerto Rico, i.e., if all right, title
and interest in the Note passes from the seller to the purchaser in Puerto
Rico.
Gain or loss recognized by a Puerto Rico Holder on the sale or
retirement of a Note (other than a Note held by a holder primarily for sale
to customers in the ordinary course of his trade or business) will be a
capital gain or loss, and will be long-term capital gain or loss if the
Holder held the Note for more than six months prior to the sale or
retirement. If the holder is a Puerto Rico resident individual and the
gain is a long-term capital gain, it will be taxable at a maximum rate of
20%. If the seller is a Puerto Rico corporation or
<PAGE>
<PAGE> S-23
partnership, or a non-Puerto Rico corporation or partnership engaged in
trade or business in Puerto Rico, and the gain is a long-term capital gain,
it will be taxable at a maximum rate of 25%.
Non-resident United States Citizens
Interest on the Notes
Interest on a Note held by a United States citizen who is not a
resident of Puerto Rico will be includible as ordinary income in an annual
Puerto Rico income tax return due from such holder. Such interest will be
subject to withholding at the rate of 20%, and the amount withheld will be
creditable against the Puerto Rico income tax liability as computed in such
return.
Sale or Retirement of Notes
Any gain realized by a United States citizen not residing in Puerto
Rico on a sale or retirement of a Note will be subject to tax in Puerto
Rico only if such gain constitutes income from sources within Puerto Rico.
If the gain constitutes a long-term capital gain, it will be taxable at a
maximum rate of 20%. For a discussion of when such a gain would be
regarded as income from sources within Puerto Rico and when it would be
considered a long-term capital gain, see under "Puerto Rico Holders" -
"Sale or Retirement of Notes".
Non-Puerto Rico Holders
For purposes of this discussion, a "Non-Puerto Rico Holder" is any
holder who or that is (i) a nonresident individual who is not a United
States citizen and is not engaged in trade or business in Puerto Rico, and
(ii) a non-Puerto Rico corporation or partnership not engaged in trade or
business in Puerto Rico.
Interest on the Notes paid prior to July 1, 1995
Interest on the Notes paid to Non-Puerto Rico Holders prior to July
1, 1995 will be subject to withholding of tax at the source at the rate of
29%.
Interest on the Notes paid after June 30, 1995
Interest on the Notes paid to Non-Puerto Rico Holders after June 30,
1995 will be exempt from any Puerto Rico withholding or other income taxes,
except in the case of any holder of a Note that may be regarded as a
"related person" with respect to the Corporation. For this purpose, a
"related person" generally will be one that directly or indirectly owns 50%
or more in value of the stock of the Corporation.
Sale or retirements of Notes
Any gain realized by a Non-Puerto Rico Holder on a sale or retirement
of a Note (other than Notes held primarily for sale to customers in the
ordinary course of the holder's trade or business) will be subject to a
Puerto Rico tax of 29%, but only if such gain constitutes income from
sources within Puerto Rico. See discussion under "Puerto Rico Holders" -
"Sale or Retirement of Notes".
PROPERTY TAX
The Notes are exempt from the payment of Puerto Rico property taxes
pursuant to Article 3.11 of the MPTA.
MUNICIPAL LICENSE TAX
Individuals
Interest paid on a Note held by an individual is exempt from Puerto
Rico municipal license taxes pursuant to Section 2(a)(7)(A) of the MLTA.
Corporations and Partnerships
Puerto Rico corporations and partnerships and non-
Puerto Rico corporations and partnerships engaged in
trade or business in Puerto Rico
<PAGE>
<PAGE> S-24
Interest paid on Notes held by a corporation or partnership that is
either organized under the laws of Puerto Rico or that is engaged in trade
or business in Puerto Rico will be subject to Puerto Rico municipal license
taxes in the municipality where an office or other commercial establishment
of such corporation or partnership is located, if such interest is
attributable to the operation conducted therein. In those cases, if the
corporation or partnership is engaged in a business other than a financial
business the interest will be subject to municipal license tax at a rate
determined by the municipality where the office or other commercial
establishment to which the income is attributable is located, which rate
cannot exceed one-half of one percent (.50%). If the corporation or
partnership is engaged in a financial business, the interest will be
subject to the Puerto Rico municipal license tax at a rate determined by
said municipality, which rate cannot exceed one-and-one-half percent
(1.5%). As provided in Section 2(a)(6) of the MLTA, the term "financial
business" includes commercial banks, savings and loan associations, mutual
or savings banks, financing companies, insurance companies, investment
companies, brokerage houses, collection agencies and any other type of
activity of a similar nature carried out by any industry or business.
Non-Puerto Rico corporations and partnerships
not engaged in trade or business in Puerto Rico
Interest received on a Note may be subject to municipal license taxes
only if the recipient operates an office or other establishment located in
a municipality in Puerto Rico. Thus, interest on a Note held by a holder
that is a Non-Puerto Rico corporation or partnership not engaged in trade
or business in Puerto Rico will not be subject to municipal license taxes.
ESTATE AND GIFT TAX
The transfer by gift or death of the Notes by a United States citizen
who acquired his citizenship by reason of birth or residence in Puerto
Rico, and who is a resident of Puerto Rico at the time of the gift or
death, is exempt from tax under the EGTA.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Corporation
directly to investors on its own behalf in those jurisdictions where it is
authorized to do so. If so specified in a supplement hereto, the
Corporation also may sell Notes through dealers or agents designated from
time to time, which agents may be affiliates of the Corporation, or to
underwriters for public offering pursuant to terms of offering fixed at the
time of sale. Any such supplement hereto will also set forth the names of
the underwriters, dealers or agents, the terms of offering, the
compensation of such underwriters, dealers or agent and the net proceeds to
the Corporation.
The Corporation reserves the right to withdraw, cancel or modify the
offer made hereby without notice and may reject orders in whole or in part.
Unless otherwise provided in a Foreign Currency, Multi-Currency and
Indexed Note Prospectus Supplement, payment of the purchase price of the
Notes will be required to be made in immediately available funds in The
City of New York on the date of settlement.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Corporation by
Sullivan & Cromwell. The validity of the Notes will be passed upon as to
matters of Puerto Rican law for the Corporation by Brunilda Santos de
Alvarez, counsel to the Corporation. Sullivan & Cromwell will rely as to all
matters of the laws of the Commonwealth of Puerto Rico upon the opinion of
Brunilda Santos de Alvarez, counsel to the Corporation. The opinions of
Sullivan & Cromwell and Brunilda Santos de Alvarez will be conditioned upon,
and subject to, certain assumptions regarding future action to be taken by
the Corporation and the Trustee in connection with the issue and sale of
any Note, the specific terms of Notes and other events which may affect the
validity of the Notes but which can not be ascertained on the date of such
opinions.<PAGE>
No dealer, salesperson, or other individual has
been authorized to give any information or to make
any representation other than those contained or
incorporated by reference in this Prospectus Sup-
plement or the Prospectus in connection with the
offer made by this Prospectus Supplement and the
Prospectus and, if given or made, such information $500,000,000
or representations must not be relied upon as
having been authorized by the Corporation or the
Agent, if any. Neither the delivery of this
Prospectus Supplement and the Prospectus nor any BANPONCE CORPORATION
sale made hereunder and thereunder shall, under
any circumstances, create an implication that
there has been no change in the affairs of the Medium-Term Notes, Series 1,
Corporation since the date hereof or that the Due Nine Months or More
information herein is correct as of any time From Date of Issue
subsequent to its date. This Prospectus
Supplement and the Prospectus do not constitute
an offer or solicitation by anyone in any state
in which such offer or solicitation is not
authorized or in which the person making such
offer or solicitation is not qualified to do so
or to anyone to whom it is unlawful to make such
offer or solicitation.
--------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
Description of Notes..................... S-3
United States Taxation................... S-15 ---------------------
Certain Puerto Rico Tax PROSPECTUS SUPPLEMENT
Considerations......................... S-21 ---------------------
Supplemental Plan of Distribution........ S-24
Validity of the Notes.................... S-24
Available Information.................... 2
Incorporation of Certain Documents by
Reference.............................. 2
BanPonce Corporation..................... 3
Popular International Bank Inc. ......... 3
BanPonce Financial Corp. ................ 3
Consolidated Ratios of Earnings to Fixed
Charges................................ 4
Use of Proceeds.......................... 4
Certain Regulatory Matters............... 4
Description of Debt Securities and
Guarantees............................. 10
Terms Applicable to the Senior Debt
Securities or Subordinated Debt
Securities............................. 15
Terms Applicable to Guaranteed
Securities............................. 18
Terms Applicable to the PIB Senior Debt
Securities or PIB Subordinated Debt
Securities............................. 19
Description of Preferred Stock of the April 13, 1995
Corporation............................ 24
Description of Preferred Stock of PIB.... 27
Validity of Offered Securities........... 29
Experts.................................. 29
Plan of Distribution..................... 30
<PAGE>
<PAGE> 1
Pricing Supplement, dated April 13, 1995,
to the Prospectus Supplement, dated April 13, 1995,
to the Prospectus dated July 21, 1994
BANPONCE CORPORATION
MEDIUM-TERM NOTE SERIES 1
Due From Nine Months to 30 Years From Date of Issue
Payment of Principal, Premium, if any, and Interest
PRINCIPAL AMOUNT: U.S. $13,000,000.00
ORIGINAL ISSUE DATE: February 15, 1995
SETTLEMENT DATE: April 13, 1995
MATURITY DATE: February 16, 1996
GLOBAL NOTE: Yes
INITIAL INTEREST RATE: 6.4375%
INTEREST RATE BASIS: 3 month libor
INDEX MATURITY: N/A
SPREAD: +.125%
INTEREST RATE RESET PERIOD: 5/16/95, 8/15/95, and 11/14/95
INTEREST PAYMENT PERIOD: 7/3/95 (will cover from 2/15/95 to 5/18/95)
8/17/95, 11/16/95 and 2/16/96
REDEMPTION PROVISIONS: "If BanPonce Corporation does not maintain top-tier
short-term ratings from a minimum of two of the six
Nationally Recognized Statistical Rating
Organizations, the purchaser shall have the
unconditional right to demand prepayment of 100% of
the outstanding principal amount of the note plus
accrued interest. Such demand shall be made by
telephone from the purchaser to the issuer up until
12:00 p.m., Cst, on the same business day on which
the prepayment will be made. The Issuer shall pay
to the purchaser the principal amount under the
note(s) and all interest accrued and not paid
theretofore on the date of prepayment. All
payments shall be made in immediately available
funds."
The proceeds from the issuance of the Note to which this Pricing Supplement
relates will be used to finance BanPonce Corporation subsidiaries.
<PAGE>
<PAGE> 2
Pricing Supplement, dated April 13, 1995,
to the Prospectus Supplement, dated April 13, 1995,
to the Prospectus dated July 21, 1994
BANPONCE CORPORATION
MEDIUM-TERM NOTE SERIES 1
Due From Nine Months to 30 Years From Date of Issue
Payment of Principal, Premium, if any, and Interest
PRINCIPAL AMOUNT: U.S. $27,000,000.00
ORIGINAL ISSUE DATE: February 15, 1995
SETTLEMENT DATE: April 13, 1995
MATURITY DATE: February 16, 1996
GLOBAL NOTE: Yes
INITIAL INTEREST RATE: 6.4375%
INTEREST RATE BASIS: 3 months libor
INDEX MATURITY: N/A
SPREAD: +.125%
INTEREST RATE RESET PERIOD: 5/16/95, 8/15/95, and 11/14/95.
INTEREST PAYMENT PERIOD: 7/3/95 (will cover from 2/15/95 to 5/18/95)
8/17/95, 11/16/95 and 2/16/96.
REDEMPTION PROVISIONS: "If BanPonce Corporation does not maintain top-tier
short-term ratings from a minimum of two of the six
Nationally Recognized Statistical Rating
Organizations, the purchaser shall have the
unconditional right to demand prepayment of 100% of
the outstanding principal amount of the note plus
accrued interest. Such demand shall be made by
telephone from the purchaser to the issuer up until
12:00 p.m., Cst, on the same business day on which
the prepayment will be made. The Issuer shall pay
to the purchaser the principal amount under the
note(s) and all interest accrued and not paid
theretofore on the date of prepayment. All
payments shall be made in immediately available
funds."
The proceeds from the issuance of the Note to which this Pricing Supplement
relates will be used to finance BanPonce Corporation subsidiaries.
<PAGE>
<PAGE> 3
Pricing Supplement, dated April 13, 1995,
to the Prospectus Supplement, dated April 13, 1995,
to the Prospectus dated July 21, 1994
BANPONCE CORPORATION
MEDIUM-TERM NOTE SERIES 1
Due From Nine Months to 30 Years From Date of Issue
Payment of Principal, Premium, if any, and Interest
PRINCIPAL AMOUNT: U.S. $10,000,000.00
ORIGINAL ISSUE DATE: February 15, 1995
SETTLEMENT DATE: April 13, 1995
MATURITY DATE: February 16, 1996
GLOBAL NOTE: Yes
INITIAL INTEREST RATE: 6.4375%
INTEREST RATE BASIS: 3 month libor
INDEX MATURITY: N/A
SPREAD: +.125%
INTEREST RATE RESET PERIOD: 5/16/95, 8/15/95, and 11/14/95
INTEREST PAYMENT PERIOD: 7/3/95 (will cover from 2/15/95 to 5/18/95)
8/17/95, 11/16/95 and 2/16/96.
REDEMPTION PROVISIONS: "If BanPonce Corporation does not maintain top-tier
short-term ratings from a minimum of two of the six
Nationally Recognized Statistical Rating
Organizations, the purchaser shall have the
unconditional right to demand prepayment of 100% of
the outstanding principal amount of the note plus
accrued interest. Such demand shall be made by
telephone from the purchaser to the issuer up until
12:00 p.m., Cst, on the same business day on which
the prepayment will be made. The Issuer shall pay
to the purchaser the principal amount under the
note(s) and all interest accrued and not paid
theretofore on the date of prepayment. All
payments shall be made in immediately available
funds."
The proceeds from the issuance of the Note to which this Pricing Supplement
relates will be used to finance BanPonce Corporation subsidiaries.
<PAGE>
<PAGE> 4
Pricing Supplement, dated April 13, 1995,
to the Prospectus Supplement, dated April 13, 1995,
to the Prospectus dated July 21, 1994
BANPONCE CORPORATION
MEDIUM-TERM NOTE SERIES 1
Due From Nine Months to 30 Years From Date of Issue
Payment of Principal, Premium, if any, and Interest
PRINCIPAL AMOUNT: U.S. $40,000,000.00
ORIGINAL ISSUE DATE: February 16, 1995
SETTLEMENT DATE: April 13, 1995
MATURITY DATE: February 3, 1997
GLOBAL NOTE: Yes
INITIAL INTEREST RATE: 6.6625%
INTEREST RATE BASIS: 3 month libor
INDEX MATURITY: N/A
SPREAD: +.35%
INTEREST RATE RESET PERIOD: Two business days prior.
INTEREST PAYMENT PERIOD: 7/3/95, 9/20/95, 12/20/95, 3/20/96, 6/19/96,
9/18/96, 12/18/96 and 2/3/97.
REDEMPTION PROVISIONS: N/A
The proceeds from the issuance of the Note to which this Pricing Supplement
relates will be used to finance BanPonce Corporation subsidiaries.
<PAGE>
<PAGE> 5
Pricing Supplement, dated April 13, 1995,
to the Prospectus Supplement, dated April 13, 1995,
to the Prospectus dated July 21, 1994
BANPONCE CORPORATION
MEDIUM-TERM NOTE SERIES 1
Due From Nine Months to 30 Years From Date of Issue
Payment of Principal, Premium, if any, and Interest
PRINCIPAL AMOUNT: U.S. $25,000,000.00
ORIGINAL ISSUE DATE: February 28, 1995
SETTLEMENT DATE: April 13, 1995
MATURITY DATE: February 28, 1996
GLOBAL NOTE: Yes
INITIAL INTEREST RATE: 6.375%
INTEREST RATE BASIS: 3 months libor
INDEX MATURITY: N/A
SPREAD: +.125%
INTEREST RATE RESET PERIOD: 5/16/95, 8/15/95, and 11/14/95.
INTEREST PAYMENT PERIOD: 7/3/95 (will cover from 2/28/95 to 5/18/95)
8/17/95, 11/16/95 and 2/28/96.
REDEMPTION PROVISIONS: "If BanPonce Corporation does not maintain top-tier
short-term ratings from a minimum of two of the six
Nationally Recognized Statistical Rating
Organizations, the purchaser shall have the
unconditional right to demand prepayment of 100% of
the outstanding principal amount of the note plus
accrued interest. Such demand shall be made by
telephone from the purchaser to the issuer up until
12:00 p.m., Cst, on the same business day on which
the prepayment will be made. The Issuer shall pay
to the purchaser the principal amount under the
note(s) and all interest accrued and not paid
theretofore on the date of prepayment. All
payments shall be made in immediately available
funds."
The proceeds from the issuance of the Note to which this Pricing Supplement
relates will be used to finance BanPonce Corporation subsidiaries.
